If you adopt technology and make it an integral part of your business, “you will gain a much deeper level of understanding to benefit your organisation.” That’s the message delivered by SAP America CFO Arlen Shenkman.
SAP is a multinational software company that specialises in enterprise software used to manage business operations and customer relations.
The company has a front-row view of how far behind many CFOs are on the tech front.
Business Insider spoke with Shenkman about the increasing importance of technology in the finance function. “The amount of data that businesses have should be enormous — if you aren’t able to pull specific information or don’t have visibility into a specific area within your company, this should be a red flag that you are behind in some way,” Shenkman says.
“The world is changing quickly and business model shifts are relevant to everyone,” he adds. “Technology needs to be in a position to address this shift or you will get left behind.”
Shenkman discusses some of the major impacts technology is having on the CFO role and the finance function in general.
Business Insider: What is the single biggest impact technology is having on CFOs?
Arlen Shenkman: There is an exponential amount of data available that is associated with running a business, and today technology is giving CFOs access to that data. CFOs have always been playing with data so to speak, in the sense of watching over numbers and information. Now, however, technology has provided them with the ability to make it actionable.
CFOs know that in order to be successful, they need to translate data in real time, and technology is helping them do just that. Technology is making it possible for CFOs to do more than translate data into business insights — they can use technology to analyse data, understand where the company has been because of it, and use it to control where it is going.
How is big data affecting transparency in the CFO role?
The rise of data has made it possible for people to understand their business more generally across all lines of business. For CFOs, data provides them with more opportunities to gather and analyse financial results.
To succeed in today’s business world, CFOs must go beyond typical finance functions to deliver a focus on leadership to the business.
Implementing a data-driven approach provides CFOs with more transparency into the business model. These additional, valuable perspectives will help CFOs make profitable decisions.
What are other major impacts technology is having on the CFO role?
One that comes to mind is in regard to real-time reporting. Technology has made it possible for companies to close their books every day, as opposed to just monthly or quarterly. Having accurate, timely financial information is critical to supporting decision-making, and technology has really taken that capability to the next level.
Compliance is another major area where technology is making a significant impact for CFOs. Due to the increased risk of security and compliance liabilities we experience today, CFOs are now taking a more active role, shifting toward taking on responsibilities that have traditionally been those of IT.
What should CFOs be doing to prepare for the future tech shift?
To best shape their technology investments, CFOs need to have a clear understanding of two things: First, they must understand where their business is going in the future from a business model standpoint.
Second, they need to have a keen understanding of where the competitive landscape is headed. For a company to succeed, its CFO needs to know what their competitors are offering. That way, they can determine what investments make the most sense to match or stay ahead of competition.
A recent study found that technology is the biggest stress factor for CFOs. Can you offer some advice for mitigating that stress?
In my opinion, part of the reason CFOs are stressed about technology is because technology is having a fundamental impact on the role of the CFO. As a result, a company’s expectations of the CFO are changing.
A key area where we see this shift is in the number of CIOs who are reporting to CFOs directly, which has grown exponentially over the last 10 years.
In order to mitigate stress, CFOs should spend some time educating themselves on the technology landscape. One way to do this is to find trusted advisors who can help teach them about what is happening in the marketplace. This can be anyone from another CFO to a CIO to a vendor.
What is the biggest mistake SAP has seen CFOs committing on the technology front?
The biggest mistake I have seen is not having a common platform that controls the books and business matters of a company. CFOs really underestimate the benefits that come with having a single platform in terms of how they control that business and understand the risk behind it.
Today, many companies still have a patchwork of technologies that are responsible for various parts of the business. By allowing the platforms to remain separate, CFOs actually end up having a lot less control than they think, which can impact financials negatively in the long term.
What advice would you give to CFOs looking to implement tech changes at small-to-midsize businesses?
Given the nature of their business, CFOs at small-to-midsize businesses, rightfully so, are very concentrated on costs. At the end of the day, it should really be more about return on investment as opposed to which offering is the most affordable.
Technology is a big decision, and can be costly, so it is easy to get caught up in the numbers. In order to make the best decision, it’s important to look at the bigger picture and determine the ROI as opposed to focusing all efforts on cost.
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